Folks,
Market Observations for the Week: Despite a weaker than expected retails sales report, the SPX continued to rally and made an all-time closing high of 5029.73. However, the correction from Tuesday may be extending as we approach Friday's monthly expiration. Friday's PPI inflation report should set the early tone. A hotter-than-expected inflation report could reinforce trader fears aggravated from Tuesday's CPI report and give us a C-Wave down of a 3-3-5 corrective pattern that could test weekly lows at SPX 4920. If the market likes the PPI report, all might be forgiven for the inflation bears, and the SPX could test the weekly high at SPX 5048.39. With 5-waves down on the hourly chart, the SPX may have made an intermediate top on Monday at SPX 5048.09 - this could give us another correction leg down into next week. We may have finished an EW 5-waves up from 1/5 on the SPX daily chart, but we could still see a retest of the ATH at 5048 by 2/20, the Tuesday after the monthly expiration. This week is the monthly option expiration week for February and is statistically 73% bullish. After a strong November, December and January and a strong earnings season, the market could see a 5-8% correction going into March, but we could see one more new high in the NDX first. We may get a chance to sell our SQQQ, SPXS and TZA shares at some point into March. Our current positions are 5% natural gas (UNG), 75% cash and 20% physical gold, silver and platinum.
2/15/24 (Commentary for Thursday) The SPX made a new closing high at 5029.73, and if the market likes the PPI inflation report early Friday, we could see a test of the weekly high at 5048.39 tomorrow. Alternatively, the SPX may have finished 5-waves up on the daily chart from 1/5 and the intermediate cycle high may have been seen on Monday at SPX 5048.39. However, the VIX closed back within its upper Bollinger band on Wednesday and Thursday and that is a buy signal for the SPX. We're looking to sell our SPXS, SQQQ, and TZA bearish shares on a possibly 5%-8% pullback into March after a possible intermediate-term high was made in the 2/9-2/12 New Moon Timing Window on Monday.
Big Picture on Stocks (UPDATED) The SPX got a run to higher highs into the 2/9-2/12 New Moon Timing Window at SPX 5048.39 before starting a possible 3-3-5 wave pattern correction that may have finished a Wave A down late Tuesday, a Wave B rally on Thursday's close and a possible C-Wave down Friday on a hot PPI report.
Big Picture on PMs (UPDATED) The hot CPI report spiked the 10-yr US rate and the USD while smashing gold down to test $2000 Tuesday evening. Gold could do a final washout to $1975 before we get much of a reversal higher.
Stocks – The PPI inflation report early Friday should set the short-term trend in the SPX. If we get a hot report, then the SPX ATH set on Monday at 5048.39 could be an intermediate-term high and we could start a C-Wave down on Friday.
Gold – Gold could wash out to $1975 before we get a reversal, but the rally in the GDX today gives some hope of a near-term bounce in the PM sector. The market liked AEM's earnings after the close.
Silver – Silver tested $21.97 early Wednesday and then reversed up in 5-waves to test $23 Thursday evening.
Crude Oil – Crude oil bounced to make a B-Wave test of the recent high at $79.29 before reversing down today.
Dollar Index – The USD spiked to test 105 after the hot CPI report and may have started an impulse leg down on the hourly chart.
TURNING POINT DAY
The turn window for this is 2/9-2/12.